SAN FRANCISCO (CN) – A Justice Department lawyer urged a federal judge Thursday to strike down a class action over long delays in processing student debt relief applications as moot, even as 171,000 borrowers remain “in limbo” with no decision from the U.S. Education Department.
Justice Department lawyer R. Charles Merritt told the judge that the rollout of a new formula for processing borrower defense claims effectively resolves a class action over prolonged waits of up to four years or more.
Lead plaintiff Theresa Sweet sued Education Secretary Betsy DeVos in June last year, claiming the department’s “pause” in processing borrower defense claims became a “policy of inaction and obfuscation” preventing defrauded students from obtaining debt relief as required by law. The plaintiffs say the long delays have damaged their credit and permanently stifled their ability to accumulate wealth.
Enacted in 2015 by the Obama administration, the borrower defense rule gave students who attended predatory for-profit colleges an avenue to have their loan debt forgiven. After Trump’s inauguration in January 2017, the Education Department announced it was taking a “pause” in processing those claims in order to “re-evaluate” the Obama-era policies.
DeVos unveiled a new blueprint for the program on Dec. 10. The revamped methodology offers sliding-scale debt relief based on a complex formula which compares the median salary of graduates from fraudulent for-profit colleges with the median salaries of graduates from similar schools.